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French tax system for new joiners

French tax system for new joiners

You come to live in France and you are wondering about your tax obligations.

Find out all about the French tax system for new joiners!

  1. Am I a French tax resident as soon as I come to France?
  2. What is taxed in France?
  3. How to file a tax return in France?
  4. Do I need to declare my bank accounts held abroad?
  5. Can I benefit from the expatriate tax regime?

Am I a French tax resident as soon as I come to France?

Your situation and your obligations in France for tax purposes will depend on the place of your tax residence.

You may be considered as a French tax resident depending on the criteria laid down by the French tax code and, potentially, those provided by the double tax treaty between France and your country of tax residence before your arrival in France.

Under French law (article 4-B of the general tax code), you are domiciled for tax purposes in France if:

  • You have in France your home or your main place of stay or,
  • You carry out in France your main professional activity or,
  • Your main economic interests are in France. This is where you make your main investments, where your business is located, where you work, or where you get most of your income etc.

If you meet one of the above criteria, you will be considered as a French tax resident under the French legislation.

But you might well be considered as a tax resident of another country based on a foreign tax legislation.

In the event of a conflict of tax residence, reference will be made to the rules of the double tax treaty signed between France and this other country, if any.

In the absence of a tax treaty between the two countries concerned, the internal law of each country shall apply, leading potentially to a double taxation.

It is therefore important to perform an in-depth analysis of your situation to determine the place of your tax residence after your arrival in France, and your tax obligations in France.

What is taxed in France?

Two criteria must be observed in order to determine what is your taxable income in France: the origin of the income and your place of tax residence.

If you are a tax resident in France upon your arrival

You must declare in France all your income, including any income sourced from abroad.

Of course, this does not necessarily mean that your foreign revenues will be subject to an effective taxation in France.

Indeed, the double tax treaty will determine the place of taxation of your revenues, depending on their nature, and the rules to eliminate a potential double taxation (full or partial exemption, tax credit etc.).

In the absence of double tax treaty, the French tax law will apply without restriction, resulting in the taxation in France of all your revenues, even those taxed in their country of origin.

Furthermore, your tax liability in France will only start as from the day on which you are considered as a French tax resident.

Any income sourced from abroad before your arrival in France will be treated according to the rules of taxation of your country of origin.

If you are not a tax resident in France upon your arrival

You must only declare in France your French sourced income.

In the absence of such income, you have no tax liability in France.

How to file a tax return in France?

Your tax compliance obligation will depend on the place of your tax residence upon your arrival in France.

1/ Upon my arrival in France, I am considered as a non-resident taxpayer

You must file an income tax return with the tax center for non-resident (SIPNR in Noisy-Le-Grand), if you come or return to France provided that:

  • you remain a tax resident of the country in which you were previously,
  • and you have French sourced income taxable in France.

2/ Upon my arrival in France I am considered as a French resident taxpayer

You had no tax obligations in France when you lived abroad

This is the case when you lived abroad and you had no French sourced income taxable in France.

In such case, the year (Y + 1) following the year of your arrival in France (in year Y), you must file an income tax return with the tax center in your area in France.

You had tax obligations in France before your arrival in France

If you were a non-resident and you had French source income taxable in France before your return (from January 1 to the date of your return), you would in principle depend on tax center for non-resident (SIPNR) during the period where you live abroad.

In such cases, the year (Y + 1) following the year of your arrival in France (in year Y), you must send your income tax return to this service, which will then forward your tax to the relevant tax service of your new area in France.

Two specific forms must be submitted:

  • For your French sourced income received before your arrival (from January 1 Y to the date of your arrival): a 2042-NR form must be filed
  • For your French sourced income received after your arrival (from the date of your arrival to the end of the year Y): a 2042 form must be filed along with its appendices

You will be taxed on the first period as a non-resident and, for the second period, as a resident of France.

Do I need to declare my bank accounts held abroad?

Yes, all bank accounts and life insurance policies held abroad opened, used or closed during the year subject to tax filing.

A specific form (3916) has to be submitted along with your tax return.

Penalties amounting at € 1,500 for each undeclared account are due.

Can I benefit from the French expatriate tax regime?

A favorable regime applies to individuals who were not residents of France for tax purposes during the five calendar years prior to their arrival in France as employee of a company based in France which recruits them (external hire or internal mobility).

Under the expatriate regime, the expatriate bonus is eligible to a partial income tax return.

Various income sourced from abroad are also partially exempt from French income tax.

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